Bankruptcy Assessment

Payday Hotline (866) 830-4501

Car-Title Hotline (866) 830-4551

Stories

Ms. C's Story

Ms. C is 58, disabled, lives on a meager $1019 per month in Social Security. She has a hard time making ends meet each month. Legitimate financial emergencies spurred her to get payday loans. She now has loans with 5 companies and pays $400 a month just to keep them afloat. She is only able to afford paying the interest, so her original loan principal remains identical to the amount that she borrowed on day one. Every two weeks, she renews one to pay another. Ms. C finds it takes almost an entire day to visit each lender with a modest payment. A payday collector yesterday told her on the phone that someone who didn’t pay ended up downtown in jail. Ms. C is terrified that she will spend the last years of her life behind bars.

VaPERL coalition members are working to relieve Ms. C of her loan and offer her legal assistance, assuring her all the while that she will not go to jail. Payday lenders capitalize on the fear that they instill and foster in borrowers that have been caught in their debt traps. DO NOT BE INTIMIDATED. Contact us for more information.

Amy's Story

I never thought in my lifetime that I would experience something like this. I guess when you’re desperate, you don’t think straight. I got involved with this predatory lending a year ago when I got hit with financial problems due to car repair and medical bills.

I tried to apply for a loan with a financial institution but was denied because of my other outstanding loans, despite the fact that I have a very good credit history. I ended up with “payday loans.”

In the beginning, I didn’t feel the burden because I could still pay it during my pay period. Then another car repair hit me after a few months and I had to increase my payday loans. I did not realize until now (after a year) that I have eight outstanding loans totaling almost $4,000 (including their high interest rate).

I finally woke up and realized that I almost couldn’t even pay my rent, which had never happened before. I also had difficulty paying my other bills and loans. I started to search the web and found out that I am not alone: there are other payday loan victims out there like me.

Since I cannot put back the hands of time, all I can do is fix it the best I can and learn from this mistake. I am now negotiating with all my payday loan creditors. Some of them had agreed to negotiate, some are still contemplating my payment plan offer, and one has threatened to garnish my wages.

Through the help of Jay Speer of the Virginia Poverty Law Center, I was able to educate myself concerning my rights as a debtor which I was not aware of. If I only knew then what I know now, I would have stopped it earlier before my loans accumulated. It became a habit since it’s an “easy” loan and I was thinking I could pay it off “one day,” but that day never happens. I am hoping that my story will help other people to realize not to deal with payday loans.

Former Payday Employee Story

I was employed with a pay day loan company for about six months before I became completely disgusted with the entire industry. These companies feed on the people living on a paycheck-to-paycheck basis. Most companies charge fifteen dollars per one hundred borrowed. A five hundred dollar loan will cost you seventy five dollars whether it is for one week or a month.

I do not know how you received your information concerning the frequency of customer’s loans, but the numbers are way off. The customers who do come in and repay the loans take out another loan right then almost every time. So if a weekly paid customer received a five hundred dollar loan and reissued this loan every week, he would be paying three thousand nine hundred dollars over the course of fifty two weeks. Not to mention some customers have more than one loan with different companies, causing them to be over extended.

Their collection techniques are sneaky and somewhat under handed. The employees of these companies are to check the account every day on an overdue loan and if the money is there, you take the check to the bank and have the bank turn it over into a cashiers/certified check, essentially cashing the check; then deposit that check in the company’s account. This takes a lot of customers off guard and creates another problem for them: overdrafts.

As a former employee of one of these companies I feel they are legal Loan Sharks and should be shut down. They do not help nor do they want to help any customers. They want to create a dependence on their services so the customer is forced to reissue the loan on every payday. I fully support any effort to run these companies out of our state.

The Truth About Title Loans

In August of 2006, I needed money for school supplies and clothes for my two children but I was really short on money. I had a garnishment for medical bills coming out of my paycheck and I didn’t know where I was going to come up with money for their school.

I had seen the commercials for LoanMax, and it sounded like a way to solve the current situation I was in. I debated about it for awhile, then I started reasoning with myself as to how the loan could work.

I told myself, I work for a doctor’s office and I make $10 per hour…that’s not becoming rich, but I should be able to survive. With the garnishment I was only left with barely enough for my basic living expenses: rent, electric, water, food, and gas to get to and from work. School was coming up quick and the garnishment wouldn’t end until November. The children needed clothes and school supplies, and they were in high school. That meant an additional expense of a laptop, which is where most of their work would be done. The school had a good deal on that since it would only be $80 per child, but to come up with $160 was going to be impossible. I didn’t qualify for any assistance because they counted my entire pay even though 25% of it was being taken to pay the hospital. I had already cut expenses everywhere I could. I was spending only $50 per week on groceries for a family of four, including personal hygiene and cleaning supplies. Even that was not enough, since I still couldn’t come up with the money.

Then I thought, well, the garnishment ends in November. If I get the loan, I can pay it off in November when the garnishment ends—so that is what I did. I went to LoanMax and got a loan for $600. The blue book value of my car was $1200.

In September I made my first payment of $150 with the money I kept from the original loan. At the end of September, two unexpected things happened to me. The first was I ended up in the hospital for four days with a kidney infection and gall bladder problems. The second thing was I learned that there was a new garnishment starting from Carilion Medical.

So in November, when the first garnishment would have ended, a new one would start. Now how was I going to pay the loan and save my car? I realized I had no choice—I was going to have to file bankruptcy. I learned that I could recover the money from my first garnishment, which was approximately $1100. Even though I couldn’t get it until December, it should have been enough to save the car.

I missed my October payment, so on November 10 I got a call from Jennifer at LoanMax. She wanted a payment of $231 so I explained the situation to her. She said my balance was at $831 and she had to have a payment by the next day. I told her I didn’t get paid until next week. She reiterated that I had until tomorrow or they would have to take the car. Sure enough, on November 16 they took the car. I called her and asked what I would have to do to get the car back before they sold it. She told me to come up with $831 by the end of the week. “So,” I said, “the only way is to pay it off?” She said no, it wouldn’t be paid off—in order to pay it off I would need $1817. How could a balance that last week was $831 now be almost $1000 more? I knew then that there was no way to get my car back. I had only paid $1500 for the car in the first place.

I was so furious. Yes, I did get the loan and I was responsible for it. However, my loan was only $600 and I had paid $150 of it back, leaving my balance before interest at $450. They had added so much interest and so many fees that I could never get it paid off. How can that be legal?

I have a warning to all others: if you’re going to a car title loan place, be aware that you are actually selling the car. If you are willing to sell your car, then you should sell it yourself and get close to the actual value of it back.

These title loan companies prey on the misfortune of others because they know these people will probably not be able to pay the loan. Even if the loan was at a reasonable interest rate, it would be a high risk. Unless there is going to be a positive financial change in the near future, they are not going to be able to pay a loan.

How would a company know this, you ask? Common sense. Who would risk the title to their car (probably the only thing of value they have, and their only transportation) except the desperate? They make it sound like they are helping with the misfortunes of life, but actually they are making a fortune off of them. 300% interest for a person with a good income could break a person, much less a person who is already in a financial bind.

George Smith

Virginian, George Smith, recently relayed this story to VaPERL:

“I am disabled and living month to month on a limited income. I realized after a year or two that I was in trouble with creditors so I quit causing my already bad credit rating to slump even lower.

“Eventually, I was so desperate for money that I let my sister talk me into taking out a loan with this company call ‘Fast Auto Loans.’ After all, I did own a car.

“When applying for this particular loan, the representative told me that on a $500.00 loan my first initial payment woud be only $150. He also said that the pay back scale would be lowered each month. Because I was desperate, I was hooked!

“So I recieved the loan in exchange for the title of my car. I paid on this loan for a FULL YEAR and never missed a payment. At the end of that year, I recieved a statement from ‘Fast Auto Loans’ charging me a renewal fee including interest which balooned the loan back up the old balance of $500 plus.

“I think I paid them close to $1000 total trying to get rid of this loan. At one point when I told this company that I could not meet my obligation for that month, they said “come on in Mr. Smith we will work with you.” However, all they did was renew my loan and give me a credit increase of a $100 – putting me further in debt with them.

“I realize after that I had only added to my original mistake. Since I was still without the money I needed to live, I often thought “was it worth the risk?” I was worse off after the loan than before it.

“Fortunately, I was able to buy a few things for myself that I needed. Some of the law makers are saying no one twisted any arms to make individuals such as myself take out these loans. Although, that might have a ring of truth, I look at it as my honest attempt to meet an obligation with this company with no end in sight because I could not pay them back $500 in one lump sum. I did my best and my best wasn’t enough. I don’t understand why our leaders who we elected to protect us allow this type of lender to even exist knowing what their intended purpose is!

“In the end, I lost my car even though I paid back more than $1000 towards this loan of $500. They sneaked up and took it while I slept with the full backing of the laws of this state. I could not afford an attorney, so I have no car and have to depend on others to get around or the poor public transportation. Either of these situations are difficult at times.

“Again, maybe I should have thought it out more careful walked away or I should never have gotten these loans but if any one can walk a mile in my shoes and under similar circumstances not do the same, I applaud them.”

George Smith

The Cycle Caught Me

I came across your listserv posting regarding predatory lending. You mentioned that you were looking for individuals who had fallen victim to the payday lending cycle. I am one of those individuals. I have fallen into the cycle twice and both times swore I would never do it again. I am currently trying to work my way out of the cycle. Each time I try to get less money. Sometimes I’m just not able to meet that goal, and I end up getting the same amount two, three, or four times before I am able to afford to “lose” another $50 in addition to the fees I have to pay. Unfortunately, these businesses seem to offer an easy “fix” to the consumer who lives from paycheck to paycheck and has no savings to cover unexpected expenses or emergencies. The problem is it sends the consumer into a downward spiral that is very difficult to climb out of. The organization I deal with has instituted a policy where after a certain number of loans (13 or 14 I think) you can’t take out another loan for another 24 hours. This can be devastating because you learn to depend on getting the money back that you just gave them.

I would be interested in learning more about the alternative financial services and credit counseling available. Sometimes it just seems like there is nowhere to go. An important point I would like to make is that there is no stereotype of your “typical” person who falls into this trap. I would probably seem like the least likely person to be caught in this cycle, but it can happen to anyone. It is terribly embarrassing and I hate doing it every time I get paid. But unfortunately it is like an addiction–I can’t quit “cold turkey” otherwise the rent goes unpaid or my family lives on peanut butter and jelly or the food stores from my church for two weeks.

The Story of Ms. Opie

Ms. Opie asked to borrow one thousand dollars ($1000.00) but was told that she could only borrow a maximum of eight hundred dollars ($800.00).

In addition to the three hundred sixty percent annual interest (360%) rate, Ms. Opie was also immediately assessed a two hundred dollar ($200.00) “Cash Advance Fee.”

As a part of the transaction, Ms. Opie pledged her 1993 Ford Explorer that had a value of approximately three thousand dollars ($3000.00).

Ms. Opie fell behind on her payments to Loan Max and Loan Max refused to take partial payment.

Loan Max repossessed the vehicle. Vehicle was sold on October 8, 2005 by private sale for one thousand fifty dollars ($1050.00). They sent her a letter telling her she now owes $413.

She is alleging:

Violations of the Truth in Lending Act (failure to properly disclose the 25% cash advance fee).

Violations of the Virginia Consumer Finance Act (Small Loan Act). She alleges that the lender is not exempt from the Act because the loan doesn’t meet Virginia’s open-end loan requirements so Loan Max is in violation for being unlicensed, charging a 25% cash advance fee, and charging more than 36% APR.

My Daughter's Car Title Loan

This story was received by VaPERL from a concerned father. The names have been redacted for privacy’s sake.

I looked at your website and [my daughter]‘s story is basically the same as Ms. Opie’s. [My daughter] borrowed $2200 and ended up paying the company almost $11,000 when she paid off the loan in about 10 months. Here are the basic particulars of the loan.

[My daughter] moved from my house to a townhouse with a roommate in August of 2005. As her credit rating would not allow her to borrow money elsewhere, she visited Loan Max in September and borrowed $2200 to assist in setting up her new residence. She received a statement from the company in October and paid her first monthly payment of $670. It is noted that she was paying $650 a month in interest and $670 as a payment, which in the best scenario, allowed her to decrease the principle by only $20 per month.

The following month she moved back to our house. It is noted that she did not inform the company of her change of address and did not receive another statement from them. It is also noted that the address listed on the monthly statements we received when the account was closed, listed an incorrect house number. Loan Max claims that the statements were not returned as undeliverable. Her roommate claims statements were not received at the old address either. Last month, she contacted the company to check on the outstanding balance of the loan and was told it was $3500, after paying payments of $670 per month. She then told me about the loan and her and I went to Alexandria and paid the loan off.

When I came home, I was so upset, I immediately began helping her prepare formal complaints against the company (Loan Max) which were submitted to Maryland and Virginia Government offices, that supposedly are in business to protect the consumer. Each office responded with “sorry, there is nothing we can do about this.” I had pretty much given up my quest to expose these business practices, and chalked this experience up as a very expensive lesson learned by my daughter.

While surfing the net on Friday, I came across the organization Ms. Fox works with. Needless to say the fire under me was relit. I doubt very much if my daughter will get any of her money returned, but at least between your and Ms. Fox’s organizations, the public will be better educated and these types of businesses will become regulated, so the “loan sharks” will eventually fade into the woodwork.

Gail's Story

Around 1996 my father passed, who lived in Roanoke Rapids, North Carolina. By 1998 I decided to move back to Roanoke Rapids to try to help my mother. I continued to work in Petersburg, Virginia, which made my commute around 185 miles a day. Eventually, my paycheck ran out before the month did. So initially, I saw an ad in the newspaper on advance payday loans. It was just a curiosity, wondering “how did this work?” I did not need but maybe 20 dollars to get me through until payday. So I think, as I recall, I requested around $150.00 and to pay them back, maybe 25 dollars. I used this maybe twice.

A few months passed and the same situation came about that I needed a few dollars before payday. By this time, I passed a business in Roanoke Rapids advertising something similar. So, I did the same thing as before, but I think that it was around 50 dollars, paying back $12.00 for the usage of the 50 dollars. I used that business a couple of times and then did not need their services anymore.

A few months passed and I started using this business again. By that time I started requesting larger amounts, which meant larger fees. Before I was aware, I was using the services more than I had planned. Eventually, I owed them more than I could pay back, due to it was averaging over $200 a month that I was paying in fees. So, this was my great idea: I would go to another payday loan company and pay the original payday loan company. Before I knew it, it had become a vicious circle, stopping by one payday loan company and taking the payment to the other payday loan company.

I began to feel sick about what I had gotten myself into. Not only had I created an extra $200 a month bill (the fees), but I could not afford the new bill. Also, as I went by every payday, I saw the same faces, or rather the same customers. I decided that no matter how much it may hurt, I was going to make one last visit to pay the payday loan and never visit again. By the time I did go make that last payment, 1) they had gone to my bank and cashed my check, 2) they wanted to charge me an extra $25 for going to my bank.

Around 2004, I started to work on my credit. Lo and behold there it was, I still owed Cash Advance $125 reported on my credit. I quickly had to find the business that I owed. By that time, the payday loan companies that I had previously done business with were closed and now it was up to me to find them.

My personal thought is that I blame myself for being so vulnerable, and I blamed myself for getting myself into that mess.

I question who or what organization approves of these types of companies that are able to make so much money off of someone who comes on bad times.

There are probably some points that I missed, due to it was a few years ago. However, each time I pass by the businesses with their flashing signs with the words they use to lure new customers, I get a sick feeling inside that some people may not be as fortunate as I was to get from under that bad situation.

Karah's Story

I got a payday loan last May to pay for an emergency. That’s when the horror started.

Immediately, it was clear that I could not pay the first one back without getting another payday loan. So from May until October, I was paying $500.00 (principal) plus $75.00 (interest) every other week. It was like I was borrowing my own money just to stay afloat with the lender!

In early October my husband got ill and could not work. We are relying solely on my income. At this point, I just could not pay back CheckSmart because I couldn’t afford the interest. So I called CheckSmart and wrote them a letter, telling them I honestly wanted to pay them back. I asked the customer service rep on the phone if could I pay them installments of $150.00-$200.00 a month. The gentleman (if that’s what you want to call him) was incredibly rude and told me he was going to get me hauled away in a Sheriff’s car for stealing.

When I told him my lawyer said I could consider filing bankruptcy, he told me, “your quack lawyers don’t know anything in VA.” Next I told him I was going to call Governor Kaine to which he replied “go ahead and call your Governor – I don’t care, they don’t know anything either.” He called me a thief and a stealer. I told him I ran into hard times, and that I had written an explanatory letter to CheckSmart. He said to me, “yeah I got your letter and ripped it up and threw it away.”

I was so scared by the end of the phone call I was crying, because I wasn’t familiar with the laws and I thought I was going to jail for sure. He told me I could get locked up. Thanks to some wonderful advice [from VaPERL members] I feel safe again. With my payday loan, I felt like a mouse in a trap crying to get out but couldn’t. These people are not out to help anyone – rather, they are out to hurt people and destroy their lives.

Anonymous Story

This story was sent to us by a victim who is concerned about the negative effects brought about by payday loan stress.

“I have been a nervous wreck for 2 days and have cried my eyes out. The thoughts of going to jail almost made me suicidal thinking if I was dead my daughter could draw my social security. This threat was a real threat to my entire life you see. Please don’t think I am suicidal–but it made me think what if someone that was not stable was in this situation thinking they would go to jail? Somebody else might go through with it.”